By Kate Gibson, MarketWatch

NEW YORK (MarketWatch) -- U.S. stocks on Thursday piled new gains atop their biggest rise in three months as retailers beat Wall Street's expectations and the European Central Bank said it would continue stimulus measures.

"A lot of consumers are experiencing recession fatigue for having denied themselves," Sam Stovall, chief investment strategist at S&P Equity Research, said of upbeat sales data from retailers including Abercrombie & Fitch Co. (ANF) and Target Corp. (TGT).

Better-than-expected economic reports in the U.S. and from overseas in recent days have added "credence to bottom-up earnings forecasts previously viewed as too optimistic," said Stovall.

Poised for its first back-to-back sessions of triple-digit gains since July 26, the Dow Jones Industrial Average (DJI) was recently up 102.40 points, or 0.9%, at 11,358.18, with 26 of its 30 components rising, led by home-improvement retailer Home Depot Inc. (HD), up 5.2%.

The S&P 500 Index (SPX) had risen 14.74 points, or 1.2%, to 1,220.81, with financial companies pacing gains and consumer staples the only lagging sector among its 10 industry groups.

The Nasdaq Composite Index (RIXF) had meanwhile gained 26.92 points, or 1.1%, to 2,576.35.

For every stock in decline, two gained on the New York Stock Exchange, where volume topped 663 million shares as of 2:40 p.m. Eastern.

Ahead of Wall Street's opening bell, the government had reported that initial jobless claims increased by 26,000 to 436,000 last week, while the four-week average declined to a two-year low of 431,000.

"Claims did rise, but the overall trend is still showing a bit of improvement. Even though unemployment remains above 9%, at least it's not getting worse," said Stovall of S&P, which is forecasting that the Labor Department will report the addition of 165,000 jobs in November, about 15,000 greater than the Wall Street consensus.

The data, which had jobless-benefits claims climbing more than expected in the latest week, come ahead of Friday's monthly jobs report, with most economists expecting the unemployment rate to hold at 9.6%.

The National Association of Realtors said its pending-home-sales index climbed 10.4% in October, with the trade group's chief economist saying an improving labor market is giving a lift to the housing industry, which was described as in a "recovery phase."

Meanwhile, in Europe, ECB President Jean-Claude Trichet said the central bank would keep offering banks unfettered access to loans through the first quarter, helping to allay worries that Europe's sovereign-debt troubles would deepen.

U.S.-listed shares of Wimm-Dann Foods (WBD) surged 28% after PepsiCo Inc. (PEP) said it would buy a majority stake in the Russian company for $3.8 billion.

 
 
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